Tax Rate Calculation is a yearly service the NKADD provides to cities and special districts. Tax Rate Calculation ensures that a taxing district receives at least the same amount of revenue each year from real and tangible property taxes as outlined in KRS 132.010. This process helps provide a stable amount of revenue each year.
The taxing authority does not have to adopt the tax rate provided by these calculations. It is free to choose its rate, with some legal limitations. The calculation only computes rates to be used as benchmarks by the taxing district when setting their rates. The compensating rate is the rate that would provide the same amount of revenue each yeah when considering only real property.
The NKADD also calculates a substitute rate and a rate +4, which provides for 4% more revenue relative to the compensating rate. The substitute rate, found in KRS132.010(6), applies the compensating rate to the total current year assessments of all classes of taxable property. If the resulting revenue projection is less than the revenue produced in the previous year then the compensating rate is adjusted upward until the revenue produced is no longer less than the previous year. This revised compensating rate is called the substitute rate.
There are some procedures engendered by taking a rate above the compensating rate, including public hearings and, if the taxing district goes beyond the rate+4, the opportunity for a recall vote on the rate (See KRS 132.017, 132.018, 132.0255). Rates imposed by cities are restricted to the requirements set by KRS 132.027 and 132.029. Special districts also have specific limitations imposed by KRS 132.023 and 132.024.
Any city or special government entity is eligible to have a Tax Rate Calculation computed.
Who does the program benefit?
Tax Rate Calculations benefit the jurisidictions that request calculations for the NKADD. Tax Rate Calculations offer an unbiased computation of compensating rate that include the most accurate data available. In addition the jurisdiction recieves a packet detailing the sources of information, calculations, regulations, and calculated rates presented in a comprehensive packet of information for conisderation by the jurisdictions tax setting body.
Services Offered within the Program
Creation of tax rate calculation packet.
- Collection of Public Service Company data from the Commonwealth
- Assistance creating Public Hearing Notices
- Support for understanding the tax rates and their meaning/impact
Downloadable Forms (pdfs)